Streaming audio giant Spotify said it added 8 million subscribers in the quarter ending June 30, undershooting its estimate of 8.5 million additions.
The company, which has been moving aggressively into podcasting under Chief Content Officer Dawn Ostroff, now has 108 million paying subscribers and 232 monthly active users. Those figures are up from the prior quarter’s level of 100 million and 217 million, respectively. The monthly active user figure encompasses both paying subscribers and non-paying users.
“We missed on subs. That’s on us,” the company explained in a letter to shareholders. “The good news is that the shortfall was execution related, rather than softness in the business, and we expect to make up the lost ground before year-end.”
Podcasting remains a small but growing segment of Spotify’s business. Ostroff, a media veteran known for her stints running TV networks and Condé Nast Entertainment has orchestrated a series of high-profile deals in the space. A landmark agreement with Michelle and Barack Obama was announced several weeks ago. In the shareholder letter, executives said they “continue to expect fast revenue growth from podcasts through the remainder of 2019 and into 2020.”
The company’s stock pulled back 2% in early trading Wednesday, a hit blamed on the subscriber miss. Shares have run up 37% in 2019 to date as streaming audio continues to expand in the auto, home and mobile arenas. Connected TVs also offer millions of additional distribution points for Spotify.
Revenue in the quarter increased 31% over the same quarter of 2018, to a bit less than $1.9 billion. Operating losses of $3.3 million shrank more than Wall Street analysts has expected while operating expenses increased 4%. Its operating loss narrowed to $3.34 million, the company said — better than estimations of analysts who expected Spotify to lose about $62 million on sales of $1.83 billion.
Along with financial results, Spotify also disclosed deals reached with two out of the four major record labels for licensed content, saying it is in active talks with the other two. Streaming music stemming from those four sources represents the majority of the activity and revenue generation on the company’s platform.